On March 15, 2007, the Eighth Circuit Court of Appeals ruled that a policy of denying coverage for contraception under an employee health plan did not constitute discrimination on the basis of sex or pregnancy. This decision is directly contrary to a December 2000 ruling of the Equal Employment Opportunity Commission (“EEOC”) stating that health plans must cover contraceptives if other preventative treatments are covered, and it further clouds the issues for health plan sponsors trying to determine whether they are legally required to cover contraceptives.

The Eighth Circuit Decision

In Standridge v. Union Pacific Railroad Company, a group of female Union Pacific employees brought a class action lawsuit against the company alleging that its health plans violated Title VII, as amended by the Pregnancy Discrimination Act (“PDA”). Title VII provides, in part, that it is unlawful for an employer to discriminate against employees on the basis of sex. The PDA amended Title VII’s definition of sex discrimination to include discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions.”

The Union Pacific plans at issue denied coverage for any type of contraception, whether prescription, nonprescription, or surgical, to both women and men absent a noncontraceptive medical necessity (e.g., treating skin conditions or avoiding serious health risks associated with pregnancy). The employees argued that the denial of coverage for contraception violated the PDA because contraception is “related to” the condition of pregnancy. Union Pacific countered that the PDA applies only to medical conditions that occur after pregnancy, while contraception relates to human fertility before pregnancy.

At the outset, the Eighth Circuit noted that district courts were split as to whether the PDA required coverage of contraception and that neither the Supreme Court nor any other court of appeals had considered the issue. In 1996, however, the Eighth Circuit determined, in Krauel v. Iowa Methodist Medical Center, that the PDA did not require employers to provide fertility treatments in their health plans. In that case, the court stated that the PDA’s phrase “related medical conditions” referred only to conditions associated with pregnancy and childbirth. The court concluded that “[i]nfertility is ‘strikingly different’ from pregnancy and childbirth because infertility prevents conception, while pregnancy, childbirth and medical conditions related to them can occur only after conception.” Analogously, the Eighth Circuit held that contraception was not “related to” pregnancy for PDA purposes, because, like infertility, contraception prevents pregnancy from occurring and is a medical treatment indicated only prior to pregnancy.

The Eighth Circuit also rejected the employees’ claim that the policy treated women less favorably than men. The court noted that the exclusion of coverage for contraception applied to men and women equally in that the policy provided no coverage for male nonprescription contraceptive devices or surgical procedures. Thus, the Eighth Circuit rejected the employees’ discrimination claims and held that the PDA does not require employers to provide coverage for contraception because contraception is not “related to” pregnancy for PDA purposes and is gender-neutral

Practical Implications

In December 2000, the EEOC ruled that the PDA requires employers to provide the same coverage for prescription contraceptives that they provide for drugs, devices, or services that are used to prevent the occurrence of medical conditions other than pregnancy. Thus, whereas the Eighth Circuit decision examines only whether contraception coverage is provided equally to women and men, the EEOC ruling examined whether health plan coverage in the aggregate was provided equally to men and women. In other words, under the EEOC ruling, if an employer provides coverage for the prevention of other medical conditions, it must also provide coverage for prevention of pregnancy.

The Standridge decision is binding only within the Eighth Circuit, which encompasses Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. Therefore, employers with employees outside the Eighth Circuit must consider the continuing impact of the 2000 EEOC ruling and a number of conflicting federal district court decisions on this issue, as other federal courts of appeals may reach different conclusions than the Eighth Circuit about the legality of excluding contraception coverage from employee health plans. Based on the EEOC ruling, many employers have added prescription contraception coverage since 2000. It should be noted that Union Pacific added prescription contraception coverage after the trial court in the Standridge case initially ruled that the company’s health plans violated the PDA, and the company recently stated that it has no current plans to take away that benefit based on the Eighth Circuit decision. Until the law on this issue becomes more widely settled, this appears to be the most prudent approach for employers with employees outside the Eighth Circuit.